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Norman Smith explains why GMB funding cut is so serious for Labour
The GMB union is to cut the affiliation funds it gives Labour from £1.2m to £150,000 in the wake of a row over reforms, it has announced.
The union said there would also be cuts in spending on Labour campaigns.
The changes will take effect from the start of next year.
It comes ahead of Ed Miliband's move to reform union funding so individual union members have to opt in to support the party, rather than being automatically affiliated.
Currently unions are easily Labour's biggest donors. Of the £3.14m the party received in the three months from April to June, the GMB gave £486,000.
'Dream on'The five biggest union donations - from Unite, the GMB, Unison, Usdaw and the Communication Workers Union - came to £2.27m in total.
Analysis
Ed Miliband knew his decision to change the way unions work with the party would cost Labour money.
He hoped it would bring a bigger, more active membership even if it hit funding.
For now, the party seems set to suffer the financial pain before it enjoys any gain.
Today's announcement is not a total surprise. Paul Kenny of the GMB made his doubts about Miliband's plans very public.
But the timing changes things.
The GMB has decided not to wait for Labour to decide on the details of its new arrangements before it makes its decisions, not least because it has an important vote on the fund it uses for its own political campaigning next summer.
Insiders feared if it could lose that vote - and be forced to ditch the fund - if it did not sort out its relationship with Labour now.
None of this stops the union from making a big donation to Labour in the run-up to an election
But as we enter the conference season, the GMB's actions may encourage other unions to follow its lead.
The GMB said its decision to reduce its funding for Labour reflected its estimate of the number of union members who would be willing to affiliate themselves to it individually following Mr Miliband's change.
At the moment the union automatically affiliates 420,000 of its members to Labour, at £3 each per year,
It estimates about 50,000 of the 650,000 GMB members would actually choose to affiliate with Labour. This figure is derived from the number who took part in the Labour leadership contest in 2010, it said.
The move comes despite Mr Miliband's plea to unions to campaign to get their members to sign up.
But shadow Treasury minister Rachel Reeves told BBC Radio 4's Today programme: "Most of the money that the Labour Party receives comes from ordinary donations. Of course we welcome the support we get from the trade unions, but this is a decision for the GMB."
She added: "I'm confident more people will sign up and get involved in the Labour Party and get out campaigning."
A GMB source said the idea many more members might to choose to join Labour was "fantasy land... dream on".
A statement from the union expressed "considerable regret about the apparent lack of understanding the proposal mooted by Ed Miliband will have on the collective nature of trade union engagement with the Labour Party".
LABOUR'S BIGGEST DONORS - APRIL TO JUNE 2013
- Unite - £772,000
- GMB - £486,000
- Unison - £458,000
- Usdaw - £411,000
- Communication Workers Union - £143,000
- Source: Electoral Commission
It said a further source "of considerable regret... is that the party that had been formed to represent the interest of working people in this country intends to end collective engagement of trade unions in the party they helped to form".
Labour MP Ian Lavery, who has described the affiliation reform as the "biggest political gamble" in the history of the party, said: "People are not queuing up to join Labour - quite the opposite. They are waiting to see what the party will bring to the table in its manifesto."
Mr Lavery, who chairs the trade union group of Labour MPs, said he believed fewer than 15% of union members would opt to join the party under the changes.
Former home secretary - and union leader - Alan Johnson told the BBC the GMB's decision was "very unhelpful", adding: "I just hope this is not just a piece of petty retribution by a trade union, I would think that the GMB, as the great union I know they are, would be above that."
Angela Eagle, shadow leader of the Commons, told the BBC's Daily Politics she hoped Labour's relations with the unions could "evolve" - "we have to change it, perhaps it hasn't changed soon enough. We have to go out and persuade individual members of the trade union they should join the party".
BBC chief political correspondent Norman Smith said the GMB hoped the pre-emptive move would help protect its political fund, which members are due to be balloted on next year.
The concern was that if members felt the union was still giving large sums of money to the Labour Party, they might vote to scrap the political fund altogether.
The political fund is used for broader campaigning issues.
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